ROI calculations....?

[golfboy7]

ok so help me out here, i'm a finance major so i should know this but for some reason I'm a bit confused ( i know, that's terrible and my teachers would be pissed considering that I graduated 4 months ago...but anyway)

I take my total investment and divide it by my total winnings to get my ROI right?

Also, what other calculations are important to calculate when trying to analyze results over the long term?

And last, is Poker tracker really worth purchasing?

[AaronBrown]

Profit divided by investment is indeed return on investment. But if you're talking about Poker, profit is easy to measure, investment is not. If you have a $10,000 bankroll, take $2,000 to a casino, and buy $500 chips to sit down in a $10/$20 game; what is your investment? The right way to answer is to figure out the maximum amount you would lose before quitting the game. The most you can lose on one hand is $500, but you would probably be willing to lose the entire $2,000 in some cases, it will be hard for you to access the $10,000. But you have to think this through in advance. If you find yourself ever buying more chips than the maximum loss you assumed, you have to change your assumption. Maximum means maximum, not maximum except for. . .

[velvetdog]

ROI is most useful when you are either requesting funds or comparing options for allocation of funds. In business you must demonstrate an adequate ROI in order to receive funding for your proposal. Those who control the purse strings will evaluate different options for the limited cash they have available; ROI is a useful metric for help in determining where to put the money to get the most bang per buck.

Given the above, I think ROI is relevant to poker if you are trying to decide how to use your bankroll. Example: Should I play poker with my $2000, invest it in the stock market, count cards at blackjack etc?

I consider my major investment in Poker to be my time. Thus, average hourly win rate is my measure of choice. I can calculate win rate in various games and circumstances, then compare them to determine where I can make the most $ per hour (8 tabling 1-2 online vs. 6/12 B&M at casino XYZ for example). This objectively cuts through all of the questions about which is better: online or B&M, Vegas or local cardroom, # tables online, various limits, tournament or cash, limit or NL and on and on. The results can speak for themselves.

The accepted metric for performance on this forum is win rate in BB/100. I like this metric also, but not as much as the hourly rate for the reasons described above.

I hope this is helpful